The question of which pathways regulate the differentiation of the stratified epidermis has been central to epithelial biology. Transcription is one of the most important regulatory mechanisms controlling the stepwise program of epidermal differentiation. Epidermis has been used as an excellent model for studying the process of cellular differentiation because the cells form a stratified structure during development, and each stratum is easily identified by morphology and expression of specific markers. Our research effort have focused in characterizing the regulation and function of Dlx3 homeobox transcription factor, a member of the murine Dlx family, with essential roles in epidermal, osteogenic and placental development. Transgenic temporal and spatial mis-expression of Dlx3 in the pre-differentiated basal layer caused an abnormal skin phenotype, characterized by cessation of proliferation and premature differentiation of the basal cells judged by the upregulation of expression of late differentiation markers such as loricrin and filaggrin. We are assessing the role of Dlx3 in modulating the cell cycle during the epidermal differentiation process using cultured keratinocytes and mouse models with inducible-ectopic expression of Dlx3. Recent results have also indicated that epidermal deletion of the Dlx3 homeodomain transcription factor leads to disruption of the barrier formation and is linked to the development of an inflammatory response. Utilizing a mouse model we are studying the effects of endogenous excess of retinoic acid on developing skin and the molecular and cellular events that lead to defects in skin morphology and differentiation. We are also continuing with the characterization of a novel Ca++-binding protein identified in the laboratory.The Ca++-binding protein, Scarf (skin calmodulin-related factor) belongs to the calmodulin-like protein family and is specifically expressed in the differentiated layers of the epidermis. Scarf contains four conserved EF-hand motifs. The Ca++ signaling dependent systems, such as keratinocyte differentiation process, must be finely tuned for rapid and effective response to transient variations in Ca++ concentration. A central role in the transduction of Ca++ signals is played by members of the Ca++-binding proteins. We have approached the study on the functional role of Scarf in barrier restoration during wound healing process. We found increased expression and nuclear presence of Scarf in epidermis of the wound edge 3 and 7 days post wounding, entailing Scarfs role in barrier restoration. We propose that Scarf plays a critical role as a Ca++ sensor, regulating the function of its target proteins in a Ca++-dependent manner during epidermal stratification. We are utilizing a mouse model for the targeted deletion of Scarf during embryonic development to understand the in vivo role of Scarf on wound healing and barrier formation.